“The ambassadors to the North Atlantic Treaty Organization (NATO) will meet on Wednesday at the request of Poland on basis of the alliance's Article 4,” reported Reuters while quoting two European diplomats after an explosion in Poland close to the Ukrainian border reportedly caused by a stray Russian missile.

The news also defines Article 4 as it said, “According to article 4 of the alliance's founding treaty, members can raise any issue of concern, especially related to the security of a member country.”

Reuters also quotes one of the European diplomats as saying, “The alliance would act cautiously and needed time to verify how exactly the incident happened.”

Elsewhere, the United States and Western allies said they were investigating but could not confirm a report on Tuesday that a blast in NATO member Poland resulted from stray Russian missiles, while Russia's defense ministry denied it.

Also read: Ukrainian Pres': Russian missile strikes on NATO territory are ‘a significant escalation, action is needed’

Market implications

The news quickly reversed the market’s previous risk-on mood and helped the US Dollar to recover, which in turn exerts downside pressure on the EURUSD price. That said, the major currency pair stays pressured around 1.0350 at the latest.

Also read: EURUSD stays defensive near 1.0350 amid shift in sentiment, US Retail Sales, ECB’s Lagarde eyed